Big malls squeezed as shoppers head local

Less people are going to to shopping malls  as they opt for local neighbourhood centres. Picture: Supplied/ iStock
Less people are going to to shopping malls as they opt for local neighbourhood centres. Picture: Supplied/ iStock

Spending per head at shopping centres has decreased by 1.7% over the past year, to the lowest level since the end of 2015.

One of the reasons for this could be that consumers increasingly appear to prefer doing their shopping at their local neighbourhood centre rather than at a big mall.

If the growth figure for shopping centres continues declining, it could dampen overhead growth in trade density (turnover per square metre), which will have a knock-on effect on the net income growth of shopping centre owners. This is according to the latest retail report of the SA Property Owners’ Association, for the quarter to September.

The decline in spending was despite the fact that the head count per square metre had been increasing steadily by about 2.5% from April.

The growth in trade density for the year ending in September also increased by 4.3%, against reviewed growth of 4.1% for the year to June.

Anton de Goede, property portfolio manager at Coronation, said it appeared that taking large monthly shopping trips to malls were a thing of the past, and that consumers were instead preferring to use smaller community or neighbourhood centres, where special offers were a big draw card.

The turnover of some of the smaller shopping centres appears to be benefiting from this trend. Neighbourhood and community centres in particular have shown steady growth in trade density of 9% and 5.12%, respectively.

De Goede said stronger growth in trade density had to be seen against a backdrop of the consolidation of space in retail, especially among grocery retailers. “Although some of the retailers have reduced the size of their centres, they are still succeeding in trading at similar levels to some of the bigger shops,” he said.

In contrast, the growth in the trade density of the bigger regional and superregional centres was 1.12% and 2.58%, respectively. The regional centres have been battling for some time and have been unable to show trade density growth of more than 2% since 2017.

The growth in trade density for the year ending in September also increased by 4.3%, against reviewed growth of 4.1% for the year to June.

Their performance is affected by the fact that many of these centres are located in the same catchment areas as some of the smaller convenience centres and some of the superregional centres, with a larger variety of lessors and longer trading hours.

Among the biggest merchandise categories, electronics retailers had the best showing, with trade density growth of 8.3% for the year ending in September.

The food category – encompassing grocery and supermarket retailers, as well as department stores – also performed well, with trade density growth of 7.18% and 6.84%, respectively.

The clothing category did relatively poorly at 1.73%, with the bigger centres having much more exposure to clothing retail stores.

De Goede said clothing retailers were gradually establishing an online presence, which could be having a negative effect on this category’s trade density growth.

The research is based on data collected by MSCI Real Estate in more than 24 categories among 100 shopping centres, having a combined floor area of just less than 5 million square metres


Latest issue

July 2020

Latest issue
All the news from City Press.
Read now
Voting Booth
South African truck drivers have threatened to not return to work and instead allow foreign nationals to be at the forefront of the trucking industry should employers continue with their preferential hiring tendencies/ if things don’t change.
Please select an option Oops! Something went wrong, please try again later.
Results
Agree. Put SA first
48% - 169 votes
Foreigners have rights
16% - 57 votes
It smacks of Xenophobia
36% - 125 votes
Vote